Budget musings….

We have made great strides in our approach to financial management over the last several years. We have built up a set of financial management principles, policies, and practices that have enabled us to close the gap between tax rate increases and the consumer price index following a significant period of downloading from the provincial government. You can see this trend in one of the slides that I presented in my State of the City Address this year to the Guelph Chamber of Commerce. We have achieved this through a persistent focus on conservative, long-term financial management practices so that the gains we make can be sustained over the long term.

Council as a whole has increasingly assumed a more strategic role in setting the budget, getting out of the way of our Administration whose job it is to manage the organization, while expecting an enhanced level of accountability and reporting on their performance. We are poised to take the next step in enhancing the way we do business with the approval of the 2013 budget.

This budget will increase the capacity of Council to fulfill its oversight responsibilities to our constituents and the capacity of the organization – from the front-line to the executive leadership – to deliver excellent results for all citizens, exceptional personal experience for all customers, and value for money for the taxpayer. The budget has been aligned to the goals of the Council-approved Corporate Strategic Plan and continues good progress on doing business differently.

Council also approved a new efficiency target ($500,000) to challenge our management team in 2013.

Sometimes members of Council look to hold the line on taxes by removing specific items from the budget to achieve this. This can negatively impact services and/or increase risk. Others might look to the Rate Stabilization Reserve at the end of the evening to reduce the tax levy. The Rate Stabilization Reserve negatively impacts the base budget in the next year. This reserve was not used in 2012 or for the 2013 budget.

The efficiency target respects the management expertise and responsibilities of staff and is more appropriately aligned with our governance role as Council. It will also lower the base budget next year (a good thing) which is the opposite of what using the Rate Stabilization Reserve does. Performance on the efficiency target will be reported to Council throughout the year as part of our regular monitoring of our budget.

Each year, efficiencies are found by our employees that help reduce the next budget. Now with the efficiency target in place, some of this work will be made transparent to Council and the community.

It won’t be the first time for politicians to take credit for a good idea so let me say it here – the idea for an efficiency target came from a public delegation. Councillor Karl Wettstein, in particular, began to talk up this idea with his colleagues and our CAO and the idea took hold.

4 Comments on “Budget musings….”

The ‘efficiency target’ is an interesting idea, but I’d like to know more about how it will work. For instance, to get close to 3%, staff was coming up with all kinds of proposed cuts to services that were quite small compared to $500K. So, aside from cutting staff or services, where will such large ‘efficiency’ savings come from? And if the target is not met, where does the money come from to cover the difference? Thanks!

Staff seek continuous improvement in the way they deliver current services at current service levels throughout the year. The tracking of this work through an efficiency target will make this work more transparent. Council, through the approval of the Corporate Strategic Plan and the budget, has also provided our staff with more tools to continue their progress on “doing business differently”. The efficiency target will allow us to see how this investment in training and new technology also improves efficiency. This is the work of the Administration. Changing service levels and/or the services is the work of Council. Immediately, those discussions may be heard through the Operational Audits that our Internal Auditor will begin this year (this depends on the approved scoping of these audits) and whether Council supports conducting a service rationalization in 2014. The monitoring of expenditures and efficiencies against budget targets occurs through a regular Variance Report to the CAFES committee. I would encourage you to follow the variance reporting to review progress on meeting the efficiency measure.

The $500,000 efficiency target set by Council as part of the 2013 tax supported operating budget process will be a collaborative process undertaken City wide. Staff will be examining their existing processes and looking for ways to achieve or exceed the target. If the target is not met through efficiencies, staff would look for other ways of meeting this goal. At the end of the year if the target is not met, a stabilization reserve is available to fund the remaining year end deficit.